Which of the Following Would Be an Example of an External

question 87

Multiple Choice

Which of the following would be an example of an external benefit?

• A) More people start to ride the bus and as a result air pollution is reduced.
• B) Firms are able to reduce their costs of production by using a more efficient technology.
• C) The government requires polluting firms to pay a special tax.
• D) A firm has just gotten permission to open a landfill on property that is adjacent to your home.

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Definitions:

Tariff Revenue

Income that a government receives from imposing duties on imported goods.

Foreign Producers

Companies or individuals that manufacture or provide services in one country for consumption in another country.

Domestic Producers

Local or national firms and individuals that produce goods and services within a country.

Free Trade

The absence of tariffs, duties, or trade barriers between countries, allowing for the unrestricted exchange of goods and services.